Tanduay to absorb P1.9B in debt incurred by Eton shareholders

Tanduay Holdings Inc. is set to absorb about P1.9 billion worth of offshore liabilities by two companies that own affiliate Eton Properties Philippines.

This move is part of the consolidation of all companies under the Lucio Tan group.

In a disclosure to the Philippine Stock Exchange on Tuesday, Tanduay said its board had approved the assumption of certain liabilities by Paramount LandEquities Inc. and Saturn Holdings—two companies that own Eton Properties—to British Virgin Island companies.

The disclosure said Paramount owes P1.35 billion to Step Dragon Co. Lt. and Billinge Investments Ltd. while Saturn owes P521.3 million to Penick Group.

In exchange for the assumption of these liabilities, Tanduay will convert its receivables from Paramount and Saturn into equity upon the increase in capital stock of these companies.

These companies that own Eton Properties have liabilities to outsiders.

With this transaction, Tanduay will assume the liabilities of Eton and thus becoming the latter’s creditor.

“Tanduay will now convert these debts into equity later to get majority or substantial control of Eton. It’s like a debt-to-equity conversion,” a source from the LT group said.

Tanduay expects to gobble up P236.5 billion in total assets of the Lucio Tan group as part of its transformation from a beverage unit to the taipan’s umbrella holding firm led by heir-apparent Michael Tan.

It was earlier reported that all major local businesses under the group will be folded into Tanduay such as: 90 percent stake in beer brewer Asia Brewery, at least 83 percent of cigarette manufacturer Fortune Tobacco Corp., 98.1 percent of Eton Properties Philippines, 49.84 percent of flag carrier Philippine Airlines, 50.97 percent of budget carrier Air Philippines Corp., 34.79 percent of Philippine National Bank and 27.62 percent of Allied Bank.

As part of the consolidation, Tanduay will be renamed LT Group Inc.